<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest
Event Reported): January 21, 1994
CHIQUITA BRANDS INTERNATIONAL, INC.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
New Jersey 1-1550 04-1923360
-------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
</TABLE>
250 East Fifth Street, Cincinnati, Ohio 45202
-------------------------------------------------------------------
Registrant's telephone number, including area code: (513) 784-8011
There are no Exhibits.
<PAGE> 2
INFORMATION TO BE INCLUDED IN THE REPORT
Items 1, 2, 3, 4, 6, 7 and 8 are not applicable and are omitted from this
report.
Item 5. Other Events
The Company has made the following disclosures in a shelf Registration
Statement on Form S-3 No. 33-51995 filed with the Securities and Exchange
Commission relating to an aggregate of $300,000,000 of debt securities,
preferred stock and common stock. The Registration Statement, which also
constitutes Post-Effective Amendment No. 1 to Registration Statement 33-43946
was filed on January 21, 1994, with a deemed filing date of January 24, 1994
with respect to the remaining $100,000,000 of unsold securities thereunder.
RECENT DEVELOPMENTS
EUROPEAN COMMUNITY BANANA REGULATION
On July 1, 1993, the European Community ("EC") implemented a new quota
effectively restricting the volume of Latin American bananas imported into the
EC to approximately 80% of prior levels. The quota is administered through a
licensing system. Challenges to the quota and many matters regarding
implementation and administration of the quota remain to be resolved. In May
1993, the principles underlying the new regulation that discriminate against
Latin American banana exporting countries in favor of certain African,
Caribbean and Pacific countries were ruled illegal under the General Agreement
on Tariffs and Trade ("GATT") by a GATT dispute settlement panel. In December
1993, EC representatives discussed a tentative, even more discriminatory
proposal with a few Latin American banana producing countries. The tentative
proposal was rejected by an overwhelming majority of the Latin American
countries. As widely reported in the press, in January 1994 a GATT dispute
settlement panel ruled on a second lawsuit against the current EC regulation in
favor of the Latin American countries. GATT rulings in favor of the Latin
American countries could result in an increase in the total volume of Latin
American bananas, including banana volume of the Company, which could be
imported under the quota. However, there can be no assurance that the EC will
comply, or the manner in which it would comply, with such rulings. (See
"Results of Operations" below for discussion of the impact of the EC quota on
current operations.)
<PAGE> 3
RESULTS OF OPERATIONS
Net sales for the third quarter of 1993 of $552 million and first nine
months of 1993 of $1.966 billion declined from the comparable prior year
amounts of $612 million and $2.102 billion primarily as a result of lower
banana volumes and prices. Nevertheless, for the third quarter of 1993, the
Company reported a reduced net loss of $25.9 million, or $.50 per share,
compared to a 1992 third quarter net loss of $79.4 million, or $1.55 per share
(including a loss on discontinued operations of $7.5 million, or $.15 per
share). For the nine months ended September 30, 1993, the Company reported net
income of $9.3 million, or $.18 per share, as compared to a net loss of $90.6
million, or $1.74 per share, in the same period of 1992 (which included a loss
on discontinued operations of $21.4 million, or $.41 per share). This
improvement is attributable to the continuing benefits of Chiquita's multi-year
investment spending program and the ongoing impact of its restructuring and
cost reduction efforts. These programs address all aspects of the banana
business including a decreased reliance on high-cost purchased fruit, enhanced
production practices, shipping fleet realignment, reorganization and
consolidation of marketing organizations, and overhead reductions.
Since imposition of the new EC quota regime on July 1, 1993, prices
within the EC have increased to a higher level than the levels in prior years.
Banana prices in other worldwide markets have been lower than in previous
years, as displaced EC volume has entered those markets.
The favorable cost comparisons achieved during the first nine months
of 1993 as a result of the Company's investment spending and cost reduction
programs have continued throughout the fourth quarter. Fourth quarter banana
price levels in the EC remained higher than pre-quota price levels of the 1992
fourth quarter. However, EC prices weakened during the fourth quarter from
earlier post-quota levels partially as a result of the EC's late issuance of
fourth quarter import licenses and its announcement of an expiration date for
these licenses that was earlier than marketplace expectations. The Company
expects that, absent unforeseeable factors, it will report a 1993 fourth
quarter loss which is sizable, but considerably less than the $1.77 per share
loss from continuing operations (excluding restructuring and reorganization
charges) for the same period in 1992.
Chiquita also expects that the improved cost trend will continue into
1994. In addition, the EC quota impact could cause first half 1994 banana
prices in the EC to exceed pre-quota first half 1993 levels as they have since
implementation of the quota. First half 1994 prices outside the EC could
continue at levels lower than in previous years as they have since
implementation of the quota, although the continuing growth in per capita
consumption of bananas outside the EC could mitigate any such decline.
DISCONTINUED OPERATIONS
During the fourth quarter of 1992, after evaluation of reorganization
plans announced earlier that year and completion of other preparatory actions,
the Company adopted a plan of disposal for all remaining Meat Division
operations. Accordingly, these operations were classified as discontinued
operations and were deconsolidated. (See Note 3 to the Company's Consolidated
Financial Statements for the year ended December 31, 1992, incorporated by
reference into the Company's Annual Report on Form 10-K for such year.)
<PAGE> 4
Pursuant to the plan, the Company immediately completed the sale of a
major fresh pork processing facility in December 1992.
During 1993, the Company engaged in extensive activity with respect to
execution of the balance of its disposal plan. Numerous proposals for the
purchase of individual components of the Meat Division were received from a
larger number of buyers than originally expected. Although progress under the
plan has been slower than anticipated, partially as a result of the Company
evaluating all these proposals in the interest of maximizing shareholder value,
the Company has made significant progress in the implementation of its disposal
plan. This progress includes:
o successful ongoing cost reduction efforts that have contributed to the
improvement in Meat Division operating results to approximately
breakeven levels for 1993.
o progress toward obtaining further substantial cost reductions for 1994
and beyond relating to retiree medical costs. In June 1993, the
Company received a favorable court ruling on its previously filed
litigation that confirms its right to unilaterally reduce medical
benefits of retired hourly employees. This ruling is being appealed
by the union and a hearing on the appeal is scheduled for February
1994.
o receiving subsidies and concessions from the State of South Dakota and
the City of Sioux Falls that will enhance the operating profitability
of the Sioux Falls plant. These incentives were offered in September
1993 by newly installed state and city administration officials who
took office in April 1993 after their predecessors, including the
Governor of South Dakota, were killed in a plane crash on their return
from a meeting to discuss incentives with Company and Meat Division
representatives.
o obtaining financial incentives and concessions in November 1993 from
the City of Sioux City, Iowa and the local labor union to enhance the
salability of the Sioux City pork processing plant as an operating
facility.
o signing a letter of intent in December 1993 for the sale of the entire
Specialty Meat Group. The Company is presently negotiating with this
buyer and expects to complete the sale of this group in the first half
of 1994.
o obtaining a new stand-alone revolving credit facility in June 1993 to
fund the Meat Division's working capital needs.
The Company also continues to be engaged in vigorous marketing efforts
with respect to the remaining Meat Division operations that now reflect
improved prospects as a result of the favorable developments described above.
It expects to complete the divestitures of these operations by the end of 1994.
<PAGE> 5
The Company has reevaluated its provision for loss on discontinued
operations recorded in 1992 and believes it is adequate to provide for any
losses on disposition. The developments during 1993 regarding the Company's
Meat Division have not had and are not expected to have a material adverse
effect on the Company's liquidity, financial condition or results of
operations.
Net sales from discontinued operations for the nine months ended
September 30, 1993 were approximately $1.2 billion.
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 24, 1994 CHIQUITA BRANDS INTERNATIONAL, INC.
By /s/ William A. Tsacalis
-----------------------------
William A. Tsacalis
Vice President and Controller
